MORTGAGE brokers predicted last week that Brits are “days away from wholesale increases” in mortgage rates, as UK borrowing costs hit their highest level since the 2008 Global Financial Crisis — and their predictions have come true.
On Monday morning, multiple lenders, including Barclays, Santander, Skipton, TSB and the Nottingham Building Society announced rate hikes. The hikes differed from lender to lender but many were in the range of 0.15%.
Brokers warned that “if you’ve been holding out for cheaper rates, waiting has now cost you money” and urged people to “act now to secure current rates before further hikes filter through”.
One described the rises as “a painful reality check for borrowers”, adding that, “for everyday households the window of cheap borrowing is slamming shut”.
Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, said: “Significant changes on Monday morning from many of the mainstream lenders, adding to changes announced by others last week.
“Mortgage borrowers still have a few hours to bag a new deal if their mortgage is due for a renewal shortly, and first-time buyers and home movers will need to budget for these rate hikes.
“Higher mortgage rates will always slow the property market, especially when certain sectors and locations in the UK are already struggling.
“The government needs to react quickly to boost the housing sector and the overall economy before this spirals out of control.”
Darryl Dhoffer, Founder at Bedford-based The Mortgage Geezer, said “escalating conflict in the Middle East has spiked energy prices and supply risks, reigniting inflation fears and prompting money markets to bet on central bank rates staying higher for longer”.
He added: “As swap rates rise, banks must quickly lift deal pricing to protect their margins. For borrowers, waiting could prove expensive. Anyone with deals expiring within six months should act now to secure current rates before further hikes filter through.”
Stephen Perkins, Managing Director at Norwich-based Yellow Brick Mortgages, said “with several mainstream lenders now increasing rates in quick succession, this is clearly no longer about one or two isolated repricings”.
He continued: “The direction of travel across the market has shifted. For borrowers, the important point is that mortgage pricing can change faster than Bank Rate because lenders respond to wholesale funding costs and market expectations.
“If that pressure persists, the range of more competitive fixed deals could continue to narrow, even without any change from the Bank of England.”
Matt Coulson, Founder at Rickmansworth-based Heron Financial, said: “This is the mainstream lenders catching up. Last week it was mainly specialist lenders and the odd big name repricing.
“Now five high-street names have moved in a matter of days, and when they shift together like this it points to the wholesale cost of funding rather than any one lender’s book.
“Swap rates have drifted up and that feeds straight into fixed pricing, so the cheaper deals are being pulled and reworked across the board.
“For anyone coming off a fixed rate or buying, the practical point is that a rate can usually be secured a few months ahead and still reviewed if pricing improves before you complete, which is where a broker earns their keep in a fast market.
“I’d still avoid reading this as a one-way street. Swap moves reverse as quickly as they arrive, and a lot rides on the Budget.
“The bigger picture is unchanged: the monthly cost of borrowing is still stretched, and that, more than any 0.15%, is what keeps the market subdued.”
Iain Thompson, Director at Evolve Finance, said: “This coordinated rate surge from high street giants like Barclays and Santander is a painful reality check for borrowers. For everyday households, the window of cheap borrowing is slamming shut.
“Those currently on standard variable rates or sitting on tracker deals will feel the squeeze immediately, while anyone with a fixed-rate product expiring in the next six months faces a significant payment shock when they are forced to refinance.
“The absolute next step for borrowers is to stop waiting for rates to fall and lock in a deal now. Some lenders allow you to secure a product up to six months before your current term ends.
“Securing a rate today provides a vital insurance policy against further market increases, and you can still switch if a cheaper deal miraculously appears.”
Harry Goodliffe, Director at Winchester-based HTG Mortgages, said: “Borrowers with fixes ending this year now have a choice: grab a rate while it’s there. Most lenders let you switch if something better turns up, but you can’t reclaim a rate once it’s gone.”
Rohit Kohli, Director at Romsey-based The Mortgage Stop, added: “If you’ve been holding out for cheaper rates, waiting has now cost you money. This is just another climb on the rates rollercoaster we’ve been on all year.
“Markets are spooked by the scale of government borrowing and there’s no clarity yet on how the Budget plans to deal with it. That’s pushed bond and gilt yields higher over the past week or so, and lenders were always going to react.
“What you need to do now is act. Secure a rate. Most lenders will let you switch to a better one before completion if the market turns, so there’s very little to lose by moving and plenty to lose by stalling.
“This is the first batch of increases, not the last. I’d expect more.”
Tony Sanchez, Founder at Bridging Loan Directory, said: “Several lenders repricing at around the same time matters more than any single rate increase.
“Borrowers approaching the end of a fixed deal should review their options early, because a product available today may disappear before they are ready to apply.”
